This morning, Adobe announced that they are working to bring the Flash Platform to the living room via broadband enabled TVs, set-top boxes and other devices and are already working with multiple content, OEM and System on Chips (SoC) vendors to make this happen. While I don't blame Adobe for wanting to get Flash on as many devices and platforms as possible, the reality is that this won't be a game changer or have much impact.

This isn't a knock on Adobe, they are being smart and trying to extend the Flash Platform to as many places as possible. But Flash was never built for video, let alone for operating outside the PC environment. That's not to say that it can't work on other devices, but I see quite a few hurdles in their way keeping this from being successful.

Lets start with the broadband enabled TV route. The average consumer holds on to their TV for twelve years, a stat Netflix recently provided on one of their IR calls. I don't know if that is true or not, but even Adobe's blog says the average is at least six years. While there are over fifty broadband enabled TVs models that will be coming out in the second half of this year, realistically how many are going to be sold in the first three years? The numbers won't be big. Even set-top boxes don't get replaced every few years and the cable company never goes door to door replacing equipment. Until I got TiVo with cable cards and dumped my cable box, my set-top box had not been replaced in six years.

Putting all that aside, how well will Flash work on the TV in terms of performance? For starters, when it specifically comes to HD video quality, Flash is not exactly leading in that department. Trying to get HD videos to play on my MacBook from their showcase website is a poor experience, with my six month old MacBook not being able to handle the processing power that's needed. Yes, it works for 480p content, but only Adobe classifies 480p as "HD" on the web, no one else does. How much processing power will the TV or set-top box need to have even with the "optimized implementation of Flash technology" that Adobe is working on? Flash video is a resource intensive beast and unless Flash Lite is much better, I think the performance is going to be a big issue. I want to see this working at 1080p on a 50" TV set without someone needing to have a 10MB connection.

While Adobe did announce this with the support of a bunch of major content owners, none of them said exactly what they are supporting. Will it be text and widgets, or specific video apps? If we're talking widgets, like the kind that Yahoo! has been working on, great, but that's not video. I remember when Adobe announced the Adobe Media Player for the desktop with a bunch of content partners, which sounded great, but has gotten almost no traction. Having content owners mentioned in the release does not guarantee adoption or success.

Many in the industry point to a recently released Parks Associates white paper as proof that broadband households want widgets and web video on their TV. The report says that "almost 50% of [broadband households] are interested in premium Web content, including TV shows and movies, through a connected set-top box."
Great. But simply being "interested" does not mean they are willing to
replace their TV, spend money or actually go out of their way to buy a
device that enables them to do this. I'm "interested" in having a
blu-ray player, but to date, I have not spent the money to replace my
DVD player. Being interested is not enough and is not a sign that
adoption will take place.

I don't think anyone would debate that the Flash Platform is not going to come to the living room by way of the TV set or set-top box, in any large quantity, anytime soon. And Adobe could be laying the groundwork and going after this market today for what may happen five or ten years down the road and looking to the future instead of the present. But unlike Flash on the PC, Adobe has to rely directly on the TV and set-top box manufactures in order to make this work. And considering who Adobe has to deal with and the host of problems those companies have, I would not want to have to rely on them in order to have a successful platform.

Here is a roundup of all the news I have seen come out of NAB as of this morning. I will update this list as the releases come in or as I find more of them on the wire:

• Level 3 Enhances Video Services Portfolio With Launch of New Managed Video Network Services

• New Limelight Networks Platform Enhancements Enable Content Publishers to Deliver Brilliant Web and Mobile Experiences

• Adobe Advances Content Creation, Delivery and Playback Technologies at NAB

• Adobe Unveils New Framework for Media Player Development

• Adobe Extends Flash Platform to Digital Home

• Brightcove and Adobe Expand Strategic Alliance and Further Adoption of the Adobe Flash Platform

• Inlet Partners with ZillionTV to Enable Breakthrough Online Distribution of High Quality Personalized Television Content

• Equilibrium Introduces EQ Network Hosted Service to Automate
  Personalized Video Delivery and Monetization Via Advertising From Any
  Web Video

• VBrick Introduces Rich Media Studio at NAB

• Encoding.com Partners with Brightcove – Encoding.com Services Now Available Through Brightcove Online Video Platform

• Envivio 4Caster C4 is First Carrier-Grade Encoding Platform to Support Microsoft Silverlight DRM-Protected IIS Live Smooth Streaming

• Harmonic’s Video Transcoding Solution Integrates YouTube Fingerprinting Technology

• Open Box Technologies Introduces SesameVault 2.0 to Bring the Power of Web and Mobile Video to Businesses

• BuyDRM Showcases First Microsoft Silverlight DRM Solution for Live Smooth Streaming

• CDNetworks Deploys Adobe Flash Media Server 3.5 Software Streaming Video Solution for Commercial Use

• Microsoft Smooth Streaming Provides True High-Definition Video Delivery

In a NYTimes.com article today, a YouTube spokesman said that a recent report published by Credit Suisse that indicated YouTube would lose nearly half a billion dollars this year was "inaccurate and based on conjecture". For a company that has no business model and will never be profitable with their current mentality, this denial on YouTube's part should come as no surprise.

What Google has failed to do is give anyone any reason to believe them. Simply saying a published report is "inaccurate" means nothing without them giving us any kind of clarity, which they won't do. The report said that YouTube would lose about $470M for the year and Google is not saying is how the report is inaccurate, or what the margin of error is. Google could be accurate with their statement as they could be losing more than $470M this year, or could be losing less. But even if the numbers in the report are off by say 30%, YouTube would still be losing nearly $300M this year alone. That's still a huge number.

YouTube can't be profitable, not this year, not next year, not three years from now. It has no business model, but not for lack of trying. YouTube is the quintessential example that dispels the notion in this industry that all you need is lots of eyeballs to have a profitable, sustainable business model. Google has tried paid downloads with their video store, ad rev share models of every kind, licensing of premium content and now in the NYTimes.com article it says YouTube "might eventually ask users to pay for some of its premium content". What hasn't YouTube tried?

Licensing premium content is only going to make YouTube lose even more money, not less. Their cost of licensing and distributing that content will be greater and the only way to make up for that cost is with an increased number of eyeballs to the content, yet even that won't guarantee success. While YouTube is the king of eyeballs, if the premium content they reference is targeted to a wide audience, YouTube's CPM will be lower since the ads won't truly be targeting a core set of viewers.

While the NYTimes.com article says that the recently announced content deals which includes Sony, Lions Gate, MGM and others, "are significant because YouTube dominates online video", who wants to "dominate" an industry by losing hundreds of millions of dollars a year? The author of the article is quick to point out that YouTube "is struggling to profit from its digital popularity", but does not say what YouTube classifies "premium" content to be or how that plans to help them make money. I'd be willing to bet that when we see the entire list of content coming to YouTube under this "premium content" announcement, none of us, as consumers, will classify it as "premium" content. The dictionary defines the word premium as "best", "finest" and "first-class", not exactly words I would use to define "The Addams Family", content YouTube is getting under this "premium" announcement.

StreamingMedia.com is pleased to announce our new two-day conference, the Online Video Platform Summit, taking place in conjunction with the Streaming Media West show, in San Jose, from November 18-19th. This new event is designed to help organizations of all types, not just those for whom video is their core business. Designed for video publishers of all types and sizes, whether small businesses looking to publish content for the first time, independent entertainment content creators, large media organizations, or anywhere in between, the Online Video Platform Summit will provide hands on demonstrations of some the latest online video platforms.

Session tracks will feature real hands on demos as well as sessions covering topics like customization and branding, advertising platform integration, syndication, metrics and analysis, monetization and much more. The call for speakers for both Streaming Media West and the Online Video Platform Summit is now open and the deadline for submitting speaking requests for both shows is May 31st.

For the summit, we're also looking for ways we can incorporate other organizations to help bring awareness to the event, give them co-branding and exposure and have them help lead some of the sessions. Since we are doing this during the Streaming Media West show, we've already got all of the space, registration and logistics covered. If you are a news site/blog that covers the online video platform space and wants to get involved, please contact me.

With so many organizations publishing online video, there have never been more online video platform solutions on the market and we think this is a great opportunity to show the value these platforms can provide. More details will be posted on the summit shortly and for now you can get additional details on the call for speakers page. Questions on speaking for the summit, contact Eric, questions on speaking for West, contact Dan.

I've recently spoken to quite a few ISPs about their practice of letting CDNs place servers inside their network to reduce their costs. With video traffic starting to become a real burden on more ISP's network, many are under the impression that CDNs like Akamai and others can just place their CDN servers in the last mile anywhere they want. While this was an easy and common practice for CDNs over the past few years, this is no longer the case.

Over the past twelve months or so, many of the ISPs I have spoken with said they are denying requests from the CDNs to place servers in their network or are kicking out CDNs who previously had gear in their facilities. Many of the ISPs said they are now focusing on doing it themselves and we have seen examples of this with companies like Verizon deploying video servers on their network for FiOS customers. Over time, nothing would stop Verizon from going to a content owner like Disney and cutting a deal to deliver Disney's content directly to Verizon's customers, essentially cutting out the CDN.

It's also been interesting to hear many ISPs tell me they have allowed some of the biggest CDNs to put gear on their network, only to see much of the gear go unused. I think this is because a CDN server placed inside an ISP network needs to be filled.
The cache fill is data from the CDN’s origin (or the CDN’s customer’s
origin) and most of the time, this fill will come from outside the ISPs network. The cache fill data plus the cost to house and power the CDN’s server is typically borne by the ISP. But if video is not being served from the CDN servers within the ISP network is there a real benefit to having them there? Many of the ISPs I spoke to said no and didn't see the value in letting the CDN reach their end customer for free.

It is important to remember that the ISP owns the customer, not the CDN. The CDN's customer is the content owner, but if the CDN has not done enough deals to get their servers inside ISPs or does not have enough peering in place, content owners could start dealing directly with the ISPs. Amongst the large ISPs I am talking to, those doing billions of revenue a quarter, this trend of kicking out CDNs is one that seems to be gaining traction and I hear a lot of them purchasing their own gear or working with companies like BandCon.

That said, while this all makes sense on paper, we have to see how many content owners are actually willing to deal directly with ISPs. Any major content owner who wants to bypass or supplement a CDN would have to cut deals with a lot of ISPs since no one ISP accounts for the vast majority of eyeballs. In Europe this would be easier as a few ISPs control nearly all of the consumers, but in the U.S., content owners would have to cut a lot of deals. It would not be hard to do, but one has to wonder how much expertise content owners will have to put this in place. For the major content owners, completely doable, but you'd have to be doing a ton of traffic and have quite a large reach to make it worthwhile.

Content owners may not want to do deals with ISPs until HD video is truly adopted and many ISPs are still building out their own CDN offering, not yet selling the service. So until they make it known to content owners that they can deal directly with the ISP, it's too hard to know what impact this will have in the long run. What impact this could have directly on the CDN industry we don't yet know, but this is clearly a trend, something I am hearing more and more of and something to keep an eye on.

While the channel, defined as resellers, has always been a part of some online video vendors strategy, in the past twelve months or so, many vendors are now relying solely on resellers for the vast majority of their revenue. Whether I am talking to enterprise video vendors like IVT, Qumu or Polycom or CDNs like EdgeCast, companies in all segments of the video ecosystem are keeping their sales and marketing costs down by using resellers.

For some, this a big shift from twelve months ago where companies looked to the channel for sales, but didn't really rely on it for the bulk of their revenue each quarter. When the economy started to show signs of serious problems and the number of days it took to close contracts grew, many companies realized they needed to reduce their biggest cost, which is usually sales and marketing. For some, the channel is a great model and one that should help them get through these tough times. Solutions that are complex and require a lot of other ecosystem pieces to work, especially in the enterprise, can be sold by one vendor who helps bring all the right pieces to the table. They tend to be able to articulate to the customer who all the vendors are and how their products fit into the total solution being sold. Companies like Cisco, AT&T and others do a fairly good job of bring many smaller video vendors into the picture and helping them ramp their sales pipeline.

While this strategy is working well for some, others are not having as much success. These days it seems that just about every vendor has a "partnership" with every company in the industry. These "partnerships" are nothing more than referral deals and are not done with a true resellers mentality, which is selling and integrating multiple products to the client as one combined solution. The biggest problem with these type of deals is that most vendors are only good at selling their own offerings, and not a third party. They don't have the time or expertise to really be able to sell something they don't control and sales resources are already stretched thinner than ever. While many of these "partnerships" look good on paper and make noise with a press release, the vast majority of them never produce any revenue.

While the enterprise segment of the market really has the channel strategy locked down and the CDN market as a whole is starting to make it work, many of the other segments of the industry have yet to be able to get any tangible revenue from resellers. While this will change over time, many are only looking at resellers now as they want to simply reduce headcount and keep their costs down because of the economy. This may work in the short term as you see an immediate cost savings on the books, but unless they can ramp revenue quickly, the cost savings are short lived.

The channel strategy has always been an interesting model to watch in our industry as it tends to only lead to success for specific verticals or specific products. The good news is that more are making it work and seeing the value in terms of additional revenue. What companies do you see in the industry that are doing a good job via resellers and are showing real customers or revenue from their channel approach?

Joe Ambeault, Director of Product Development and Management for Video Services at Verizon has been added as our final keynote at next month's Streaming Media East conference. Over the last 3 years Verizon has been employing a spiral development approach in close collaboration with a wide cross section of consumer segments to progressively deliver more of the Internet to the television in a mass market friendly manner. In Joe's keynote, attendees will learn about Verizon's first Internet applications for FiOS TV's approach for bringing Internet video to the set top box and Verizon's vision for the future of Internet TV.

Joe joins other keynote speakers Paul Sagan, CEO of Akamai, Gregg Moss, SVP of Enterprise Streaming at Media Bank of America and Avner Ronen, CEO and Founder of boxee.

The early registration deadline ends this Friday and readers of this blog can register with a special discount code of DRF1